The far-reaching and serious impact of the coronavirus pandemic is dominating almost every area of our lives – including our financial lives.
Covid-19 has wreaked havoc on businesses and economies around the world and the fallout from this could potentially have a significant impact on people’s financial planning strategies in terms of retirement planning, education planning, wills, tax planning and forex, amongst other areas.
Whilst it’s savvy to track the usual markers such as the price of gold and oil and international fiscal and monetary policies, as well as monitoring the global health policies and coronavirus fatality stats as these impact economic data, in order to create, grow and safeguard your wealth, it’s also essential that you keep a watchful eye on other key factors, not just coronavirus.
As we begin to look beyond the current weak economic data to the likely recovery towards the end of the year, new industries will emerge, certain existing sectors will enjoy a robust rally, whereas others will decline. We need to be taking steps to mitigate the risks and take advantage of the opportunities in terms of investments.
There are several geopolitical headwinds that could also impact financial planning which you should therefore be monitoring.
These include the uncertainty created by the 2020 U.S. presidential election. Typically, uncertainty – which is loathed by financial markets – increases during election periods.
This year’s election is viewed by many as especially significant as not only will the winner become the CEO of the largest economy in the world, they will be undertaking this role at a time when the world economically readjusts following the coronavirus global fallout.
The risk of a no-deal Brexit for the UK, EU and global economies is also a major headwind to be monitored. To date, the British government hasn’t withdrawn its threat to abandon critical discussions in June if no progress is reported, despite the colossal financial disruption stemming from the COVID-19 pandemic.
Another concern is the longer-term inflation threat. Central bank balance sheets will expand, and as we saw with the asset purchase initiatives implemented during the last financial crash, there is the risk that too much cash is being produced.
When the coronavirus pandemic is under control and cash is not stored in the same way, we may see households and businesses utilising extremely cheap loans and their cash reserves to boost the economic recovery into inflation.
In terms of your finances, inflation can be a silent killer, eroding your wealth.
Of course, coronavirus remains the principal headwind for your finances. That said, we must also track other issues that may potentially impact them.
Working with an independent financial adviser to devise, manage and implement a sound strategy is likely to be the optimal way to ensure you remain on track to hit your long-term financial goals in these unprecedented times.
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